Banks sector is playing an important role in economies. The banking industry, as the classic and the most influential of financial intermediaries, facilitates economic operations. Financial sector in the worldwide country has been changes over these years by looking the changes of financial structure environment and economic conditions. Thus, banks are a very important point to financial system and play an important role as control and contribute growth to the economic sector.
A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks. Depositors use bank performance and profitability as indicators of security for their deposits in the banks. Finally, business community and general public are concerned about their banks’ performance to the extent that their economic prosperity is linked to the success or failure of their banks.
Bank profitability has always attracted the interest of academics, economists, and policymakers. With increasing regulation during the global financial crisis, however is gives an understanding of what drives bank profits is increasingly crucial. Literature that has examined bank profitability in many countries in the l...
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...inga (1999) and Pasiouras and Kosmidou (2007).
The above estimation has left some questions pertaining to fill the gap by attempting to identify and measure factors that determine the profitability performance of commercial banks in Malaysia. What are bank-specific determinants and macroeconomic determinants influence on banks’ profitability in Malaysia compare to other countries? Do capitalized bank is contribute more on bank performance compare to other variables? Did relationships between determinants of banks’ profitability change during the financial crisis? This study therefore, intends to examine the bank specific and macro determinants on banks’ profitability, the impact capital and financial crisis on banks profit. To answer the research questions, the dissertation selected 27 commercial banks in Malaysia including local and foreign banks to fill this gap.
Each one of these reports give a detailed account of how the company is earning money, where the money is flowing, and the net profits the company is earning. These reports are an important part of the annual report and give a base account of earnings for the company along with how much cash is needed to pay off any debts accumulated over time. This analysis of each report goes into detail and gives a summary how money is distributed in the corporation as well as if the company is financially able to pay off accumulated debts (Temte, 2003). This paper will show each of these reports and how they define what decisions will be made in the future of the company in question. It will also determine what problems need to be addressed in order to fix existing problems within the corporate structure along with what plans need to be made to fix them.
These factors have a positive impact on the company’s profitability and they facilitate the lowering of costs of operation. For instance, HR policies that are used in the business improve the efficiency in operations (Lessambo 27). This attracts a high number of customers and this increase the bank’s profitability. On the other hand, the size and coverage of the bank is worldwide and this leads to the growth in the customer base and
Empirical studies of banking efficiency (see for example Karimzadeh, 2012) often measure each of these three types of efficiency. However, some scholars (see for example Sufian, 2011) have measured technical efficiency alone. Following Sufian’s methodological example, only the technical efficiency of private banks in Northern Cyprus will be measured in the current study.
This interview conducted involved a local banking institution and their Chief Assessment Officer. For the purpose of this paper the subject will be referred to henceforth as participant 1. The location of the banking institution is located in a small to medium sized town in the upper Mid-West of the United States. No personal information was obtained as well as no pertinent financial data abstracted from the interview.
...o investigate the relationship between the capital structure and profitability of firm. In order to have clearer and accurate evidence on the relationship between the capital structure and profitability, 24 of public listed companies in Sarawak Kuala Lumpur Stock Exchange (KLSE), Malaysia are chosen to test it. All the financial statement for 24 companies will record accurate and correctly in order to create an accurate test or relationship. The introduction of the research proposal will be discussed in chapter 1. In chapter 2, literature review will be discussed on various views of previous researches which relate to our topic. Research methodology and the data collection will be present in chapter 3 while chapter 4 will discuss about the result and discussion on the result. A conclusion and policy implication will be discussed in the final chapter of this study.
The study concentrated more on Ecobanks and most banks in Accra. But also took into consideration the input of the people at the managerial level because they form the decision-making body which has a direct effect on the performances of
Even though the bank has the customers cash (deposits) on hand it is treated as a liability as the money is owned by the customer and could be withdrawn by the customer at any time. While there are investment opportunities for banks whilst holding customers money (deposits), the bank does have limitations on its investment options and how long these investments options can be made. All of these factors make bank operations and their balance sheets different to a traditional commercial (non-financial) company’s balance
Banking refers to all the services and businesses offered by a bank. A bank is a financial institution that accepts deposits from the public and creates credit. The process of lending and all its activities is managed either directly or indirectly (by use of capital markets). Most banks in most countries are regulated due to their importance in the economic development. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In considering all the other regulations planned to guarantee liquidity, banks are usuallyfocusedon maintaining a minimum capital requirements based on an international set of capital standards, known as
It is of noteworthy that bank managers should understand the key factors that affect bank profitability and these factors could be internal and external determinants. The internal determinants originate from bank accounts (balance sheets and/or profit and loss accounts) and therefore could be termed micro or bank-specific determinants of profitability while the external determinants are variables that are not related to bank management but reflect the economic and legal environment that affects the operation and performance of financial institutions (Athanasoglou, Brissimis, & Delis,
Financial institution development plays a crucial role on the economy. According to the (Porter, 1966), the author shows that the level of financial institution development is the best benchmark of common economic development. And (Arellano and Bond, 1991) also found that financial institution in particular banks act as intermediaries between supply of savings and demand for loans will straightly influence the local and national economic development. Policymakers should bear in mind that the importance role of banks. Financial sector intensifying and sophistication is significant to the growth creation process even if they are comparatively big and liberalized (McKinnon, 1973) and (Shaw, 1973). (Dehejia and Lleras-Muney, 2003) indicate that a well-functioning banking system is able to improve economic growth. However, based on the studies of (Cetorelli and Gambera, 2001), there are negative relationship between the overall effect of bank concentration on the macroeconomic performance if industrial sectors are more requiring external financing for its growth rate especially younger firms are encouraging credit for their business. Nonetheless, if more dependent on external finance, bank concentration can enhance the growing of industries (Cetorelli and Gambera, 2001). A tighter restriction on non-traditional bank activities or bank ownership of non-financing companies is one of the solutions to decrease the negative effect of bank concentration on economic growth.
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.
The main function of a bank is to take in funds from surplus units, whom are persons that have excess funds (depositors) and lend to deficit units, whom are persons who are in need of funds to finance a need (borrowers).The main reason for a bank to lend is to make a profit. Banks take in deposits and in turn pay interest on these deposits. A bank is unable to pay interest if they do not have a source of income or a way of making a profit. Apart from paying interest, a bank has a demand to staff, shareholders and society. When lending funds the bank pose a risk of not only interest payable but also losing the depositors original funds. Therefore, the lending process is a critical decision amongst lenders due to the risk involved.
Never have I ever climbed a mountain peak. As a child, I imagined myself conducting expeditions in deep-frozen pathways, leading amateur explorers to the top of the world, and instructing rookies in surviving harsh blizzards. Even though slightly altered, my childhood dream has been achieved. I led a team of fellow classmates, in my Strategic Management course, to the success summit of a financial competition. Over the course of a semester, I and my teammates were supposed to create and manage a company of the IT industry, in a computer-simulated environment, along with other four rival teams. I dealt with strategy and financial matters of our virtual enterprise, while my colleagues were working on marketing and manufacturing. During the four months of the exercise, I have experienced finance from various aspects: capital budgeting, through selecting favorable investment for upcoming quarters; debt management, by assessing the necessary amount and efficiency of loans; profitability analysis and dividend policy, which had been used to compile the company’s general performance index. Working in a multinational team, which included an American, a Norwegian and a Moldovan, strengthen my negotiations skills, as well as flexibility and cooperation. But above all, this experience intensified my passion for finance. Of course, a pleasant bonus was the fact that, in the end, our company’s financial performance was six times the performance of second-best team.
This is followed in section 5 by an analysis of the recent changes in the banking industry. With the development of the financial system, declining entry barriers and the deregulation of the banking industry make banks no longer the monopoly suppliers of banking services and reduce their comparative advantages which they usually hold in the past. Whether the reasons give rise to the existence of banks are still powerful will be examined here, while section 6 offers a way of considering whether banks are declining by looking at the value added by the banks. When the value added by banks is examined, banks are not a financial intermediation, which not only conduct the traditional services but also provide more diversified
certain milestones important to all stakeholders and its customers. A bank predominantly depends on interest of loans, apart from the fee based income. If there is affect in the income interests it will directly impact the profits of the bank